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“Eventually it creates costs,” says Knud Jensen, professor of strategy and entrepreneurship at Ryerson’s Ted Rogers School of Business Management. “If you have a person who’s been with you for ten years quit, it leaves a gap in a small company in a way that doesn’t matter as much to big businesses.”

Granted, in some industries, especially those based on simple transactions, high turnover is hardly an issue.

“That’s the nature of those industries,” says Jensen. He says fast-food companies have no problem with a revolving door of employees, but contrasts these businesses with the tech sector, where knowledge retention is at the core of most enterprises.

So, he recommends businesses set benchmarks based on standard turnover rates in their industry.

“It’s a performance metric,” he says, noting that companies experiencing high turnover should examine their corporate culture.

David DiGiuseppe, founder of SiteDudes, a website development company, says workplace culture – or a “working to live, not living to work” philosophy – can make all the difference.

Since 2009, his company has grown to a staff of 35, and 75 per cent of them have been there since joining the business. He says new career opportunities and employee performance are the main reasons for turnover, but that his company works hard to keep these rates low.

“The best advice we can offer to any organization having trouble retaining employees would be to provide a fun, yet hard-working, environment,” says DiGiuseppe. “SiteDudes has BBQ’s, company softball games, bowling tournaments, pot luck lunches, themed parties and many other fun activities for our staff.”

But in a shaky economy where sometimes, a job is just a job–weeding out the bad apples from the good can be the best way to keep loyal, knowledgeable staff.

Matt Cherkas, co-owner of restaurant Yours Truly (which opened last year), functions with a small staff–six full-timers in the kitchen, one employee in charge of administration, and four full-time and four part-time servers.

Cherkas says low turnover is crucial to his business, as staff have to understand the constantly evolving menu, which is intentionally vague to promote dialogue between customers and servers.

“Many of (our customers) return as much for the food and drink as they do for the personalities they have gotten to know at the restaurant,” says Cherkas. “Removing familiar faces and introducing new ones frequently would hamper our ability to maintain such a personal atmosphere for our guests.”

His employee retention philosophy starts on day one.

“In the interview process you need to be as clear as possible about the expectations of the position and the kind of environment you are trying to create,” he says. “If you make grand promises you can't keep, the relationship will be flawed from the outset and doomed to fail.”

Staff involvement is also critical.

“We look at the restaurant as a constant fluid evolution, so employees are encouraged to voice concerns or suggestions all the time,” says Cherkas, adding establishing a communal sense of pride in a business and its product helps to bring staff onboard. “Once the day-to-day motivation becomes a true group push towards excellence, keeping people around is a piece of cake.”

So, when all else fails and an employee is headed out the door, Jensen recommends an exit interview.

“You really have to dig down and understand why the person is leaving,” says Jensen. “Many small companies don’t have someone delegated for this and say ‘just go,” instead of asking themselves ‘what should I have learned from this?”

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